by Calculated Risk on 1/05/2014 07:34:00 PM

From Stephen Fidler at the WSJ: Where Deflation Risks Stir Concerns

Anxieties are rising in the euro zone that deflation—the phenomenon of persistent falling prices across the economy that blighted the lives of millions in the 1930s—may be starting to take root as it did in Japan in the mid-1990s. "Deflation: the hidden threat," ran a headline emblazoned across a December research note by economists at HSBC.

At last count, prices are falling only in Latvia, Greece and Cyprus. And most forecasters, including those at HSBC, see low inflation as more likely than deflation on average in the euro zone.

The article lists several problems caused by deflation (too low inflation has many of the same problems). Germany's policies - and their fear of inflation - have really damaged Europe. Europe has been "Schäubled" (Germany's finance minister is Wolfgang Schäuble who is always wrong, but never in doubt).

Monday:
• Early: Reis Q4 2013 Office Survey of rents and vacancy rates.

• At 10:00 AM ET, the ISM non-Manufacturing Index for December. The consensus is for a reading of 54.8, up from 53.9 in November. Note: Above 50 indicates expansion, below 50 contraction.

• Also at 10:00 AM, the Manufacturers' Shipments, Inventories and Orders (Factory Orders) for November. The consensus is for a 1.6% increase in orders.

Weekend:
• Schedule for Week of January 5th

The Nikkei is down about 1.4%.

From CNBC: Pre-Market Data and Bloomberg futures: the S&P futures are up 2 and DOW futures are up 25 (fair value).

Oil prices have declined with WTI futures at $94.22 per barrel and Brent at $106.89 per barrel.

Below is a graph from Gasbuddy.com for nationwide gasoline prices. Nationally prices are around $3.30 per gallon (about the same as a year ago).  If you click on "show crude oil prices", the graph displays oil prices for WTI, not Brent; gasoline prices in most of the U.S. are impacted more by Brent prices.

Orange County Historical Gas Price Charts Provided by GasBuddy.com